MIS 300 Module 2-A Study on Amazon Customer Relationship Management System PDF

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Running head: A STUDY ON AMAZON: CUSTOMER RELATIONSHIP MANAGEME

A Study on Amazon: Customer Relationship Management System XXX MIS300 – Information Systems Design and Management Colorado State University – Global Campus Instructor: Kadri Brogi January 20, 2017

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A STUDY ON AMAZON: CUSTOMER RELATIONSHIP MANAGEME A Study on Amazon: Customer Relationship Management System Amazon.com, also referred to as “everything store”, started off as an online bookseller in mid 90s, and over time it has turned into the largest online retailer in the world, generating over $107 Billion in annual revenue at the end of 2015 (Amazon Financials for Amazon Inc, 2016). Amazon’s operations and business strategy revolves around 3 main segments, Amazon North America, Amazon International, and Amazon Web Service (AWS); specifically focusing on online retail sales through prime ($99/year membership) and marketplace (third party sellers), media and content delivery, and cloud computing services. Combined, these 3 segments serve consumers, sellers (on marketplace), developer and enterprises, and content creators (Amazon.com, 2015, p. 8). Amazon.com is well known to be at the forefront of technology advances, and has spent over $200 million on new analysis, logistics and database management system (DBMS) software, allowing it to grow and manage customer relationship in effective and efficient manner (Al Imran, 2014, p. 3). Customer Relationship Management System According to Jenkinson (2005), Amazon's CRM software creates business value through integrating customer sales, services and communications effectively (p. 5). In addition, this technology integrates ads and offers in order to acquire new customers, and build loyalty with existing customers. Amazon’s CRM system is extremely sophisticated as it continuously analyzes customer’s profile, shopping activities and purchase history, as well as user’s ability to comments and/or provide feedback on products and services. Amazon’s collects this data, and compares them to other customers with similar interests. System then takes the steps to detect patterns of customer’s behavior, as their information is analyzed by data mining using CRM and

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A STUDY ON AMAZON: CUSTOMER RELATIONSHIP MANAGEME artificial intelligence software. The analysis provides information that serves to elaborate profiles of customer individual interests, which enables Amazon to show personalized product recommendations on its website, transmit via email and/or display ad banners as you browse the internet (Jones, 2012, para. 5). Another service that sets Amazon apart from the competitors, is their commitment to world class customer service and support. The company’s mission is “to be the Earth’s most customer-centric company”, and CRM is clearly built to meet this objective (Jenkinson, 2005, p. 7). Most tasks can be accomplished through intuitive self-serve options, however, if you need to speak with someone, you can have a representative call you, versus you having to in, a great solution to avoid dreadful automated systems. Business Strategy Amazon has built a successful business with relentless focus on investing in new customer relationship management (CRM) along with other information systems (IS) and technologies (Jones, 2012, para. 11). Such innovative and state of the art tools have allowed Amazon to successfully execute on its business strategies of offering compelling value through low prices, large selection and convenience, maximize opportunities on existing customers, build infrastructure to support increased traffic, sales and service levels (Amazon.com, 2015 p. 9). Amazon’s vision and passion for leveraging technology to enhance guest experience has led to 22% (average per year) increase in revenue since 2011. (Annual Financials for Amazon.com Inc, 2016); along with 67% of the orders coming from repeated buyers, as compared to 10% of the industry average (Jenkinson, 2005, p. 3).

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A STUDY ON AMAZON: CUSTOMER RELATIONSHIP MANAGEME

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Although these strategies have helped Amazon gain market share in US and around the globe, it is starting to see competitive pressure from traditional (brick and mortar) stores such as Walmart, world’s largest retailer, who recently introduced their version of Amazon prime service but for half the cost ($50 vs $99 for prime). In addition, recent strings of unsuccessful investments into failed ventures such as purchase of living social and release of fire phone have been cause of concern in Amazon being able to sustain success over long-term (Agarwala, Katiyar & Singh, 2015, p. 6). Conclusion Amazon’s investment in new information systems and technology have led to great success for the company. Amazon’s CRM information system is a cutting edge solution, allowing it collect and analyze mass amount of data to find consumer shopping behaviors and patterns. Its ability to gather such detailed customer intelligence information, and use it to market Amazon’s products and services has helped them gain market share, increase revenue and provide great experience to their customers. On the contrary, competitive pressure and series of bad investments are starting to impact Amazon’s bottom line and business strategy. But, as long as Amazon continues their focus on investing in future technology, diversifying business, and providing excellent service, it will remain head and shoulders above the competition.

A STUDY ON AMAZON: CUSTOMER RELATIONSHIP MANAGEME References Agarwala, A., Arjun Agarwala, V., & Singh, R. (2015). The economist investment case study competition 2015 amazon vs walmart. Retrieved from http://www.economist.com. Al Imran, A. (2014). A study on amazon: information systems, business strategies and e-crm. Research Gate. http://dx.doi.org/10.13140/RG.2.1.1366.8247. Amazon.com. (2016). 2015 annual report of amazon.com. Retrieved from LexisNexis Academic database. Amazon Financials for Amazon Inc. (2016). Marketwatch. Retrieved from http://www.marketwatch.com/investing/stock/amzn/financials. Jenkinson, A. (2005). Amazon: Bounding customers with integrated service. Centre for Integrated Marketing, University of Luton, Luton, England. Jones, S. (2012). The business value of information systems: A study of amazon. Retrieved from http://www.articlesbase.com.

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